TORONTO - Canadians mailed fewer packages through Canada Post in the second quarter, eroding results across most of the Crown corporation's operations, while its parcels business got a boost partly from more orders sent by e-commerce retailers.

Noting that the "decline of mail is not something that's going to rebound," the Canada Post Group of Companies said that reality would weigh on any new labour agreement with its workers.

The company reported a loss of $10 million, or $4 million after taxes, on Monday, which marks an improvement from a loss $18 million, or $17 million after taxes, a year earlier.

But the Crown corporation says the latest quarter compares favourably largely due to a lockout last summer, which pulled down results in the comparable period last year, making the decline in the latest quarter seem less severe.

Mail volumes were down 4.4 per cent or 31 million pieces, it said.

Cost of operations rose 6.1 per cent, or $85 million, to $1.47 billion in the quarter ended June 30.

Canada Post's parcels business showed strength, with higher volumes pushing revenue to $302 million from $245 million a year earlier, particularly due to more shipments from e-commerce retailers.

Canada Post also has a roughly $4.7-billion solvency deficit in its pension plan.

The company noted that 71 per cent of its overall costs are tied to labour, which is why it believes it's important to reach a collective agreement with the union representing its employees.

"It's time for us to have some realistic discussions based on the current realities we now face," said Jon Hamilton, Canada Post's director of communications, in a phone interview.

"The decline of mail is not something that's going to rebound. Canadians are using Canada Post in different ways. Their expectations of what Canada Post can offer are different and we need to adjust for that."

Hamilton said that Canada Post gave its most recent offer to the Canadian Union for Postal Workers on July 19.

"For us it's an offer — and it's a new offer — (but) there's things we have to discuss with our negotiation committee," said Denis Lemelin, national president of the CUPW.

"There's a cost to maintain a public service, and I think Canada Post is a good public service."

The CUPW has urged Canada Post to expand its operations to focus more on parcel delivery, as well as consider launching a consumer banking services division that would mirror successful ventures in the United Kingdom and Australia.

"They want to shrink the corporation to make profit, and everybody knows when you shrink a corporation like that it's (preparing) the corporation to die," Lemelin added.

Canada Post locked out some 50,000 of its employees last summer after a series of rotating strikes.

The dispute ended with federal back-to-work legislation that forced workers to accept wages that amounted to less than Canada Post's last offer.

Arbitration hearings to bring a final settlement were delayed, and earlier this month the CUPW asked Labour Minister Lisa Raitt to appoint a mediator.

So far, the union hasn't received a response from Raitt, other than to acknowledge the request, Lemelin said.

The Canada Post Group of Companies is made up of Canada Post, Purolator, SCI Group and Innovapost.